Friday, January 28, 2011

UNESCO is scheduled to deliver its third opinion on establishing an airport in Rio Amarillo, Honduras in June, but Nelly Jerez, the Tourism Minister, isn't going to wait for that opinion for guidance. She announced yesterday that the government would go ahead and fast track the construction of an airport at Rio Amarillo to be finished in 2012. We've outlined elsewhere some of the politics of this decision.

Jerez announced that the Institute of Anthropology has approved the move. Jerez stated unequivocally

"It will not cause any damage to the ruins of Copan. Therefore we'll go ahead and build the Copan airport."

Really? We've already pointed out that both UNESCO, and several previous incarnations of the Instituto Hondureño de Antropología e Historia (IHAH) believe the aircraft engine noise would, over time, damage Copan if the airport was built at Rio Amarillo, but Jerez isn't waiting for the UNESCO report in June. Maybe that's because the previous two UNESCO reports strongly advised against building an airport in Rio Amarillo.

Jerez's announcement comes amidst UNESCO re-evaluating Honduras's treatment of another world heritage site in Honduras, the Biosphere of the Platano River. UNESCO is concerned about environmental degradation within the biosphere. It also has questions about possible effects on the biosphere of three recently approved dam projects on the Rio Patuca, or at least, that's how the Honduran government is spinning it.

"The [Maya] prophecies of Copan and the end of the Maya calendar in December 2012 are opening the doors so that Europe will come to our country."

She plans spectacles with concerts and other performances both inside and outside the archaeological park.

So what are the costs and benefits of this decision, because any decision involves trade offs.

The benefit of building an airport in the region are tangible. Right now it takes 4 hours to drive from San Pedro Sula, with the nearest airport, to Copan Ruinas, the town where the ruin is located. This means thousands of tourists who visit Honduras cannot make the trip. These tourists are mostly cruise ship passengers whose tour includes a stop at the Bay Islands and Puerto Cortés, usually for 24 hours or less.

The propsed airport is designed to host turbo-prop 50 passenger planes similar to those in use today between Roatan and the mainland. Cruise ships range from small (50 passengers) to enormous (4000+ passengers). Carnival Cruise lines ships, which call at Roatan, all hold 2000 to 4000 passengers. If 10% of the passengers choose an option to fly to this new airport and tour Copan, this would require 4-8 round trip flights between Roatan and Copan daily. By comparison, there are currently only 3 round trip flights daily between San Pedro Sula and Roatan, none of them non-stop. Add the San Pedro Sula (to support local tourists and those docking in Puerto Cortés) and Tegucigalpa airports into the mix and you need tens of round trip flights daily in and out of this new airport.

No one has explained where the the airplanes and staff necessary to fly in and out of the new airport will come from. If you build it, they will come? There's been no public explanation of how the government will handle concessions to fly there, nor where the operations budget for the airport will come from, or how it will be operated. Is private industry going to fill the gap? Where are the committments?

Cruise ships don't dock every day. What will these private airlines do the other days, when there aren't sufficient passengers to financially justify all these flights? Or does the Honduran government envision this working on a charter model, with the cruise lines chartering planes to fly to the new airport, in which case the question becomes, where will the planes come from, since they don't currently exist in the country? Who will set up and finance these charter companies?

You see the problem? The business case for how this will operate financially, to pay for the airport its operations, and that of the air service companies, has not been made or discussed.

These, then are the advantages: greater access to the ruins of Copan than exists now and tourism related development around it. What is Jerez giving up with this choice?

Jerez is making the decision to not develop the second largest Maya city in Honduras for tourism, ever. While the argument advanced in favor of the airport is that the runway itself will not destroy any ruins, that's a red herring; the main acropolis of the Rio Amarillo site is less than 100 meters from the planned runway. Have I mentioned these planes are loud? Tourists won't come to a place where deafening noise is part of the experience many times a day. It would be irresponsible to excavate and consolidate the ruins since they would certainly degrade over time from vibration and be subject to the corrosive fumes of airplane exhaust. The Rio Amarillo ruins won't be developed. Tourists will have no reason to spend additional time in the region. Honduras forfeits those additional tourist dollars.

The Rio Amarillo location only serves tourism development at Copan, not the wider economic development of the the department of Copan. So Jerez is focusing just on tourism at Copan, which is her purview, rather than the wider economic development of Honduras. She says she would support building the La Concepción airport only if there's enough money to be found after building the Rio Amarillo airport. Perhaps she should take a larger view? As we pointed out in our earlier post, the La Concepcion location can contribute to both the tourism development of Copan and the wider economic development of the same region for about the same cost.

Santa Rosa de Copan is a business center in Honduras. It is one of two centers of Honduras's world famous cigar industry. Many world-class cigars are either made in this part of Honduras or made from tobacco grown in this part of Honduras. Yet there is no way for its businessmen to interact easily with people outside of Honduras. Companies are forced to establish offices and warehouses in San Pedro Sula, with its local airport, and more reliable communications and electricity, rather than keeping their money and jobs in the region. This keeps development centralized, focused on the larger cities of Honduras rather than spread out; it exacerbates the differences between the cities and the rural areas of Honduras.

The advantage of the La Concepcion location for an airport is that serves equally well the development of tourism to the ruins of Copan, being only 29 km away, and the economic development of the whole Department of Copan. Its a much more sustainable economic model because airport passenger traffic is increased with demand from both tourists and businessmen. In turn, that demand provides a more sustainable model for regular air service to the region, reducing risk for the private businesses that choose to operate such service.

Jerez's announcement is the triumph of politics and short term gains over the long term development in Honduras, and the continued overemphasis on the Maya ruins of Copan as a driver of development in the region, as documented so eloquently by Dr. Dario Euraque, among others.

Jerez is advocating an unbelievably short-sighted decision that only serves the political and economic interests of those focused exclusively on Copan Ruinas.

An airport should be built in the region; just not the one at Rio Amarillo.

This Saturday, Radio América in Honduras will be broadcasting an interview with Yesenia Martínez, historian formerly employed by the Honduran Institute of Anthropology and History, dismissed in the aftermath of the coup d'etat.

Martinez writes that German Reyes, the journalist who invited her to appear Radio América, which is widely recognized as a pro-coup media outlet, was "brave" to invite her to discuss this highly charged topic.

In Honduras, you can find Radio América at 610 AM and 94.7 FM. On the web, at www.radioamerica.hn.

Monday, January 24, 2011

Something puzzling is going on in the Honduran energy field. A single company, Minerco Resources, is snapping up the rights to approved hydroelectric and wind power properties, without any cash changing hands. And it's not like Minerco is an international giant.

How does a company that in April, 2010 had just $85 in the bank, little income, and over 331 million shares of stock outstanding, whose only source of income is by issuing shares of stock, come to acquire the rights to several hydroelectric and wind generation plants, all unbuilt, in Honduras?

Let me tell you the strange tale of connections leading from a car dealership in Canada to the heart of Honduras.

In its first SEC filing, the stock registration form S1, on Dec. 10, 2008, it lists its sole asset as interest in an unbuilt 6 mile long gas pipeline (PMD-Duke pipeline) in Morgan County, TN. which it acquired from its CEO and sole officer (CEO, CFO, chairman of board) Michael Too, when the founding CEO stepped down. At this time it registers 23 million shares of stock, and in subsequent filings indicates that it anticipates it needs $1.7 million over the next year to acquire properties, and doesn't know how it will raise the funds. Michael Too is a car salesperson in Ontario, Canada; the company's largest stockholder, Raymond Li, sells audio equipment in Richmond Hill, Ontario. Corporate Headquarters move into Michael Too's residence in Quebec City after the first year.

The company continues to loose money through the March 22, 2010 10Q filing and by now there are over 55 million shares of stock outstanding. The next day, Michael Too resigns all offices with the company, and as a director as well.

The same day, V. Scott Vanis was appointed President, CEO, CFO, and Chairman of the Board of directors. Vanis, based in Houston, Texas, previously ran a financial services company that provided financing and acquisition services to energy companies, especially in Latin America.

Vanis, Minerco tells us in their press release, served as a consultant to the Honduran government on energy reserves and projects. That prior service seems to have greatly influenced the direction Minerco subsequently took.

On May 27, 2010, Minerco announced an agreement to buy the rights to the Chiligatoro Hydroelectric project in the southern department of Intibuca in Honduras from ROTA Inversiones S.A., a Honduran renewable energy project fund run by Marco Rodriguez. The price: 18 million shares of Minerco's stock payable over 2 years, and some royalties on the net income from the plant itself, once it's constructed and producing power. The stock involved was issued as new shares. Minerco must raise $12 million by May 28, 2012 to retain the project. Otherwise it reverts to ROTA Inversiones. The following day, on May 28, 2010, Minerco Resources appointed Marco Rodriguez to its board of directors, per the terms of the Chiligatoro agreement.

A press release tells us that Mr. Rodriguez has served as an energy advisor to Honduran presidents since 1994, and served on the energy panel of the strategic planning and infrastructure panel (none of which I can verify with available resources).

In June of last year, Minerco stock experienced a price run-up, all the way to $0.90 a share from its more normal $0.03, before settling back down. What fueled the trading binge, that reached a volume of 56 million shares? Two things: the announcement on June 1 that the Honduran National Energy Council had approved the Chiligatoro Project, and a $50,000 advertising deal to hype the stock.

Included in the June 1 press release from Minerco was a claim that V. Scott Vanis and Marco Rodriguez had been invited to meet with Porfirio Lobo Sosa in the CasaPresidencial.

By August 2010 there were 333 million shares of stock outstanding, and about $20k of cash in hand. The company plan requires them to raise $13 million in cash to pay for costs related to Chiligatoro over the next two years. In the following months, they went about amassing cash aggressively, all apparently based on the promise of future profits from Honduran energy projects.

Messina was concurrently Secretary, Treasurer and member of the board of another business, Alternative Energy Development Corporation, until he resigned in October of 2010, and apparently went to work full time for Minerco. That followed the September 2010 resignation of Rodriguez from the Minerco board.

Then on October 12, 2010, Minerco Resources borrowed $200,000 interest free, payable on demand, from yet another company, Mainland International, a Belize company whose address is that of an offshoring company, International Privacy Corporation.

On December 2, 2010, Minerco entered into an agreement with Centurion Private Equity LLC to buy up to $5 million of Minerco stock over two years. This stock for cash swap enabled Minerco to access up to $300,000 at a time, up to $5 million total to finance its ongoing business.

On December 7, 2010, Minerco announced to shareholders that the board had adopted a policy that allowed for the issuance of more stock, or a reverse stock split, or the creation of preferred stock shares at the discretion of the directors. They control approximately 58 percent of the outstanding stock and so had the required votes and did not need to ask other shareholders their opinion.

On December 16, 2010, Sam Messina was appointed CFO for five years and given 30 million newly issued shares of common stock (not options), with the proviso that if the company went bankrupt or he leaves in the next two years, he has to return a portion of these shares.

On December 23, Minerco filed a new form S1 with the SEC to sell 60 million shares of common stock for Centurion Private Equity, returning about $450,000 in cash to Centurion. There are now 412 million shares issued.

On January 5, 2011, Minerco purchased all of the interests of Energetica de Occidente S.A. de C.V in the Iscan hydroelectric project (in Guata, Olancho) in exchange for 1 million shares of Minerco stock, and on the condition that Minerco raises $8.5 million within 36 months. Energetica will be paid a royalty on the adjusted gross revenues of the plant, once built and operating.

On January 11, 2011, Minerco hired V. Scott Vanis as CEO for 5 years at $180K salary with bonus clauses increasing his salary if revenues reach certain targets. He was granted 10 million shares of the new, Class A preferred stock. The company changed its articles of incorporation to authorize the issuance of up to 1 billion shares of common stock, and 25 million shares of Class A preferred stock.

On January 13, Minerco announced it had a letter of intent to acquire 30% of the interests of Sesecapa Energy Company in the Rio Frio hydroelectric project (Santa Fe, Ocotepeque). The company also acquired the ability to invest in two subsequent stages of the project. The Rio Frio project is expected to begin producing power in 2012. No terms have been announced yet.

On January 18, the company bought the interests of Energía Renovable Hondureñas S.A in the Sayab Wind Project (San Marcos, Choluteca), a 100 megawatt wind generation plant for 1 million shares of Minerco Resources common stock and interest payments on the adjusted gross income when the plant begins production. In turn, Minerco must raise $10 million in the next 18 months. A similar project by Mesoamerica Energy, financed by the BCIE, is expected to cost $250 million to construct.

What do all these deals mean?

Minerco Resources must raise a total of $22 million by June of 2012, all without a penny of income other than through issuing more shares of stock.

Under current contracts it must raise a further $8.5 million by 2014 by which time, only the Rio Frio project, with the possibility to provide up to $200,00 per year in income, will be producing power. If it fails to raise the funds, all of these projects revert to the previous owners.

Clearly, energy generation in Honduras must have a lot of potential. How else could it convert the promise of a trickle of income into such a river of investment?

Sunday, January 23, 2011

The División Ejecutivo de Ingresos (DEI), sort of the Honduran IRS, thinks everyone in Honduras has internet access; at least, that's the only conclusion one can come to upon finding that in order to obtain the form necessary to buy or sell a car, or get different license plates, one must download and print it from their website.

The head of the modernization project at the DEI, Juan Carlos Galindo, said that the move to make forms only available on the Internet is part of the DEI's modernization project begun under the Lobo Sosa administration.

Juan Carlos Galindo said that the DEI has put several forms up on the website, among them the DEI-410 and DEI-490.

"The taxpayer who wishes to request or make a link to their numeric RTN only has to download the form from the institutional web page wwww.dei.gob.hn."

said Galindo.

So why did the DEI make this move? In order to download the form, you must provide your name and RTN (taxpayer ID) in order for them to pre-generate a custom identifying number of the form. In other words, the form generated is not generic, it's unique, and the number on it has your taxpayer ID number (RTN) embedded in it. So the motivation is new business logic, no doubt a new database and tracking system. Too bad it's ill conceived and impractical for all but the most modern world countries.

While the move to make government forms available on the Internet is laudable, the decision to make that the only way to access them is dumb. In the United States, with much greater access to the Internet, the IRS still has to print paper forms and make them available at its offices. We are all grateful that we can download many of them as well, but they are, none the less, completely generic forms. In Honduras, where Internet access is more restricted (about 5% of the population), this move is sheer stupidity.

But government bureaucracies never admit their mistakes. This system is in place and likely cannot be changed. If that's the case, the DEI should be required to make computers and printers available to the public in their offices, like they must do under the Transparency laws anyhow, for taxpayers to print the forms, or do the smart thing and go back to generic paper forms. This solution is too clever for Honduras or even the United States, where not everyone has Internet access.

Saturday, January 22, 2011

That's how Upside Down World subtitled a post by Rodolfo Pastor Fasquelle on the effects and reception of recent action by the Honduran Congress.

As we wrote in a previous post, the Honduran Congress passed a law that, once ratified by being passed by the next session of Congress, explicitly makes it legal to hold public referenda on constitutional reform. We wrote that what the Honduran congress did

is in no way a substitute for what the Zelaya government was proposing, and what the Frente de Resistencia has continued to advocate. Both the Zelaya government and the Frente have pursued completely revisiting the constitution through a participatory forum, an assembly, not [just] via amendment by the Congress, which these bodies argue is not truly representative of the will of the Honduran people or its broader interests and needs.

In a separate post, we pointed out the hypocrisy involved, since merely talking about asking the populace if they wanted to be asked their opinion about constitutional reform was equated, after the coup d'etat, to advocating for changes to the "set in stone" articles of the constitution, while this new legislative move was defended from the same charges.

But only an insider to Honduran politics like Pastor Fasquelle could provide a clear analysis of who wins, who loses, and the opportunities that this legislative move provides.

Pastor Fasquelle notes that Lobo Sosa had spoken in favor of constitutional reform before the coup. Lobo Sosa has made statements in the same vein since his election as president. So from that perspective, his advocacy for this is not entirely surprising, and in the present situation, it is politically expedient.

As Pastor Fasquelle writes

It should also be obvious at this stage that the National Party believes it has created the superficial changes necessary to prevent real, profound change from taking place.

This is the side of the argument that sees the congressional action as an attempt to preempt real constitutional change emerging from the will of the people.

But Pastor Fasquelle thinks that the political establishment has unleashed more than it intended:

A critical analysis of the amendment, in context, needs to take into account the dangers and should recognize its opportunistic and partisan intent. At the same time it must also recognize there has been an opening and that opportunism has created an actual opportunity.

He points to the endorsement by former President Zelaya of the action by the Honduran Congress as part of his evidence that the unintended consequences may be broader than the intended ones:

The amendment has changed the rules, and opened possibilities for the Resistance, despite the intentions of its authors.

Writing as a member-- not a spokesman-- of the Resistance, Pastor Fasquelle notes the FNRP

needs no official recognition to call for a referendum for a Constituent Assembly and to demand the repeal of amnesty for human rights violators on the day the law is officially passed. And soon the Congress may be facing an even bigger challenge: a drive to collect the one hundred thousand signatures needed to call a referendum on the abolition of the Armed Forces has already been announced.

This is where the experience that the Resistance gained in mobilizing a drive for signatures on a petition for a constitutional assembly might be seen, in retrospect, as a more significant form of political action than forming a conventional political party would have been.

Not that Hondurans can expect that the consequences of this legislation will unroll without additional drama. The right-wing Unión Civica Democratica has voiced fierce opposition to the measure, and has every possibility of being more influential in Washington than any of the other positions Pastor Fasquelle outlines, because as he notes the UCD

also has increased its presence in Washington, where it has now ever more powerful congressional allies, to pressure the Obama Administration against what its members believe to be an action as criminal as they claimed Zelaya’s poll to be.

US policy toward Honduras has hardly been coherent or progressive even before the elevation of a more right wing House of Representatives brought about by the 2010 elections. The indications that House members will politick on an overly simplified storyline of right wing nightmares are already clear. How will the recent action of the Honduran Congress that has been promoted by the US right as guarantors of constitutional integrity factor into this going forward?

Thanks to Quotha for reposting Pastor Fasquelle's published essay and ensuring it came to our attention quickly.

Wednesday, January 19, 2011

Yesterday Porfirio Lobo Sosa gave a long press conference about model cities and his unqualified support for the idea. From it, it's clear that Honduras will go ahead with the plan, with the National Congress scheduled to hold the first debate on legislation today. It's been fast-tracked, though it will take until 2012 to make all the constitutional changes that are needed to allow model cities. Nonetheless, it's interesting to hear what Lobo Sosa thinks about the idea, and how he conceives of the implementation.

He's thinking of areas of about 33 square kilometers, not the 1000 square kilometers that Romer calls for. He sees nothing wrong with ceding sovereignty over such an area for 80 or more years to either foreign governments or national or international businesses while they go about their business. He said:

"This is nothing for Honduras, above all it will be an unpopulated place not appropriate for agriculture, where now we have nothing and afterwards we will have factories, schools, secondary schools, hospitals, like in the cities of more developed countries."

But El Heraldo reports that Lobo Sosa said that if any campesino or land owner doesn't want to sell his or her land, that

"[they'll] rent their land, that means profits, there's nothing pre-negotiated, first the law, first the rules, and after that, we'll see."

which would indicate these are not unpopulated places. This was clear from another statement of his,

"If there are land holders there, they'll have the option to sell their land, or rent it."

but presumably not withhold it!

The President will have veto power over who administers the model cities.

The rush is to get it approved in this Congressional session, which ends this week, because if not, they won't finish all the approvals until the 2012 session, because of all the constitutional changes that are required. Lobo Sosa wants this done during his administration.

Lobo Sosa indicated the government was looking at Ocotepeque, Trujillo, the Agalta valley, and near the port of Amapala on the Pacific coast, as possible locations for a model city. He projects they will provide up to 3 million new jobs, all of which, Lobo Sosa assures, will go to Hondurans.

Lets see. 33 square km. is about 13 square miles, or smaller than Whittier, California, population 83,000 and exactly the size of the affluent Calabasas, California, population 22,000. Industry, California, is an industrial city of about 12 square miles, with 2500 companies generating about 80,000 jobs but it only has 777 residents.

Hong Kong has a population density of about 6400 people per square km. At that density, a model city of 33 square km. in Honduras would have about 211,000 residents.

Hong Kong is a bad success story for Romer to have chosen. Not only does he ignore the historical contingencies of his example, but he ignores the historically poor distribution of income there as well, the worst in Asia.

Who benefits in Hong Kong? The gini index measures how income is distributed across households from the poorest to the richest. To the extent that that curve differs from a straight line, income distribution is skewed. Values range between 0 and 1. The lower the number, the more evenly income is distributed. The closer the value is to 1, the more income is concentrated into fewer and fewer families.

The gini index of Hong Kong was .53 in 2008, while Honduras had a gini index of .56 in 2010. That means Hong Kong and Honduras already have similar income distributions, with lots of poor people and a few wealthy households. Would you expect something different in a model city? Why?

This income distribution is what you would expect from little regulation of capitalism. Most European countries have values in the range .2 to .3, while the US has a gini index of .45. The rich get richer, the poor stay poor, and the middle class gets poorer as capitalism is regulated less.

So tell me again how model cities will be good for Honduras?

Update: The legislation was indeed fast-tracked, and has passed. Other blogs are now paying some attention as well. This has led to Romer himself correcting Honduran press reports: Lobo Sosa either said or should have said that these would be 33 km on a size, and thus 1000 km. We would note that the decreto that was passed has nothing about proposed size. We stand by our opinion that this is a bad idea that makes no sense and note that using real people's lives as an abstract experiment should be considered unethical.

Friday, January 14, 2011

Under the rubric of "Model Cities" the Lobo Sosa administration presented a law to Congress which will give the government the right to expropriate any contiguous region of land for the use of "Special Administrative Regions" which will be owned in full by the government, but have their own fully autonomous court system, not answerable to the Supreme Court. This is based on Stanford economist Paul Romer's ideas about "Charter Cities".

Romer's idea of Charter Cities, documented here and here, was advanced by him as a development initiative for poor countries. His specific analog is Hong Kong, which he says brought so much good to China. Romer seems to ignore the fact that it brought no good to China for 156 years, from 1839 until 1997 when it was removed from its status as a British colony and merged, fully formed and developed, as a part of China. It was only when integrated into modern China that it brought any good to the country.

According to La Tribuna's description, these Special Administrative Regions pretty closely model what Romer is suggesting. A large region of land (Romer recommends 1000 square km.) would be allocated by the Honduran government, with a charter set by the National Congress. Mind you, Romer sets the target developed population at 10 million, more than the entire population of Honduras. The Charter outlines the basic set of rules under which the city will begin to operate. It is, however, not answerable to Honduran law or the Honduran constitution and may establish, within the guidelines of its charter, any set of laws it wishes using the form of government specified in the charter (eg, it need not be representative of the population in any way).

As Romer sees it, investors will fund these charter cities by setting up services and collecting fees for them (water, sewer, electricity, etc.). Land title either remains with the national government, which then benefits from the rents on the lands, or is transferred to the development authority, which then finances itself by leasing (not selling) land to developers.

Romer says these are not gated communities for the rich. He sees this as the natural evolution of the maquila, with the first residents being maquila workers assembling garments and making toys, people with little formal education. He holds the mistaken belief that such workers today already can afford city services (electricity, water, sewer) and rents on their existing salaries. Everyone would have to rent, in Special Administrative Regions. No one would own their own residence.

These regions are sort of like today's Export Processing Zones that house the maquilas, except that they will have residents who are no longer full Honduran citizens, governed instead by the laws and rules set up by the local administration to administer these areas. There is no requirement for worker participation in the local government, for example. It harkens back to the banana company towns, with the potential for all the benefits and worker abuses, except that these would be industrial rather than agricultural workers.

Why is this idea attractive to the Honduran government? It might be the claimed potential for development of the host country, although Romer basically glosses over that part in his descriptions; but I think it specifically is attractive to the Honduran government because such zones are claimed to attract the people who currently leave the country to pursue social and economic opportunities in other countries. It is said to bring home all the migrants who currently enter the US illegally after traversing Guatemala and Mexico and being victimized by criminals in those countries.

Romer came to Honduras on January 3 and presented the idea of constructing a charter city in Trujillo to the BCIE, Juan Orlando Hernández, and Porfirio Lobo Sosa. Romer is interested in setting up and financing a demonstration project in Honduras if the government will only turn over the land to him for a few years. Juan Orlando Hernandez said of the pilot

"There are many countries that are fighting to be the site of this project. Honduras has all the possibilities to do it and the government, we are interested in doing it to benefit all the population."

It's clear that this law was fast-tracked after Romer's visit. Perhaps the government should, as Mario Argueta noted in an editorial in El Heraldo, remember previous development attempts that gave concessions to foreigners. They all failed, and were bad for Honduras.

Are Special Administrative Regions Lobo Sosa's solution to the Bajo Aguan problem?

Thursday, January 13, 2011

Honduran congress-members overthrow the myth of the "untouchable" articles of the Constitution.

Say what?

That's the headline on an AFP story by Freddy Cuevas, which notes that

There is a measure of irony in the changes approved Wednesday night...

Well, yeah...

The AP article includes an interesting characterization of the original motivation for including the language in the constitution that seems to block any revision of the constitution:

The permanent ban on re-election was imposed as the country emerged from a military dictatorship, and it was meant to break the vicious cycle of Honduran leaders perpetuating themselves in power for years...

This is a worth thinking about. The implication would be that Honduras had a history of elected presidents overstaying their welcome prior to the writing of the new constitution in 1982. The archetype for this in the 20th century would have to be Tiburcio Carías Andino, who maintained his position as head of state after being elected in 1932 until 1949.

But there is not, otherwise, any evidence that elected Honduran leaders in the 20th century took part in any "vicious cycle" of "perpetuating themselves in power for years". What actually dominated the post-Carías Andino period is a pattern of repeated military interventions removing elected leaders from office, and ruling as dictators or juntas.

Juan Manuel Gálvez was elected to succeed Carías Andino (and, it must be said, with his support); after the 1954 election did not produce a clear outcome, his vice president, Julio Lozano Diaz, seized control; he was in turn forced out by the military in 1956. A year later, elections under this military government gave Ramón Villeda Morales a six year term of office. This was cut short, again, by a military coup in 1963.

The military held power-- albeit with shifting leadership-- from 1963 until 1971, and again from 1972 to 1982. (Ramón Ernesto Cruz Uclés was elected in 1971 and removed from office less than two years later by the general who preceded him, Oswaldo López Arrellano.) So what would have helped stop the "vicious cycle" of perpetuation of power in the creation of the constitution of the 1980s would have been reducing the influence of the armed forces-- following the model, for example, of Costa Rica, which abolished the military after a devastating civil war ended in 1948.

All throughout 2009, the strongest argument the de facto regime could come up with to justify the coup d'etat was that it was necessary to protect the constitution against an attempt by the President Zelaya to prolong his term in office. Some US pundits agreed that changing term limits was one of the most dangerous things a Latin American government could do. Often these same commentators cited such moves by left of center governments, while staying silent on right of center governments doing the same thing. The occasional US scholar argued that we could assume that the only reason a sitting president in Latin America wanted to promote a constitutional assembly would be to allow re-election, rejecting Manuel Zelaya's repeated denials of this intention and ignoring the many other goals of constitutional revision advanced by his government.

The new congressional action needs to be voted on a second time, by a second congress, to be considered valid, so we won't know until after January 25 whether this symbolic gesture ends here.

To be clear, what the Honduran congress just did is in no way a substitute for what the Zelaya government was proposing, and what the Frente de Resistencia has continued to advocate. Both the Zelaya government and the Frente have pursued completely revisiting the constitution through a participatory forum, an assembly, not via amendment by the Congress, which these bodies argue is not truly representative of the will of the Honduran people or its broader interests and needs.

Juan Barahona of the FNRP said in comments to the AFP that what Honduran politicians

"want is to cleanse themselves of the coup d'Etat".

"For us, you cannot reform a constitution that does not exist; it was nullified on the 28th of June of 2009; since then, we have been in a de facto period".

Wednesday, January 12, 2011

There's an interesting fight brewing between Juan Orlando Hernandez, President of the National Congress, and Jorge Rivera Aviles, the Chief Justice of the Supreme Court.

Yesterday, Juan Orlando Hernández told the television program Frente a Frente there was a possibility that Congress would remove some of the magistrates of the Supreme Court. Proceso Digital has a transcript of the interview with Juan Orlando Hernández. The transcript in Proceso Digital disagrees with some of the details in the reporting in El Heraldo, La Tribuna, and La Prensa.

He said this in answering a question about pressure on the Supreme Court.

"As President of Congress, I can't be inconsistent, that is false, there are documents that wish to discredit members of the Court and assure us that the documents by which some judges were dismissed were falsified, and this is the object of a demand at international organizations that will condemn us it that's true; and I hope to know the document, I need to see view and see it, and if I can't do it...I should be dismissed."

The contention is that the legal warrant used to dismiss the 4 judges and a magistrate, was falsified, and that false document was used to justify their dismissal. He said that the Corte Interamericana de Derechos Humanos (CIDH) has opened an investigation, and that the information sent to the CIDH and to Congress by the Supreme Court was incomplete and false.

"They [several magistrates] sent me a scanned copy of the dismissal letter which didn't agree with the report sent by the Court to the CIDH.

He answered a few more questions, and then he said perhaps the most interesting thing.

"Today the Court said that the Congress cannot remove a prosecutor, but it warranted that it can remove a President, and that is contradictory and they need to be consistent in their actions and this is a topic we will deeply tackle next."

El Heraldo claims that 4 of the Supreme Court magistrates are in Congress's sites.

In the meantime, Jorge Rivera Avilés, the Chief Justice, denies there was any falsification.

"There has been no falsification of any document, the information that has come to the President of Congress has no relationship to reality."

The Chief Justice said that if Congress wants to investigate the Court,

"First it has to qualify a just cause,which then they have to make known to the Secretary of Security and the Prosecutor's office; once that's established, they will analyze if there is a just cause for the Congress to continue."

So in Jorge Rivera Avilés's world, Congress can only investigate the Supreme Court if the Secretary of Security (Oscar Alvarez, an Executive branch appointment) and the Prosecutor (Luis Rubí, appointed by Congress) agree they have a good reason to proceed.

I have not found the above procedure codified in any Honduran law. I have not been able to locate the scans of the dismissal letter which Hernandez says are circulating on the internet.

Reading between the lines, the four magistrates of the Supreme Court who signed the original dismissal letter before the full court reviewed the dismissal of the judges and magistrates last year are the ones that are being investigated by Congress.

Apparently at issue for Hernándezis whether or not the Court issued a permission for members to march in support of the de facto regime or the UCD, yet sanctioned members who marched against the de facto regime. Voselsoberano used to have a scan of a circular that purported to be such a permission, but the story archive appears to be empty now.

All of this conversation about re-election and letting the people have a voice, currently absent, in how the country is run, centers around proposed reforms to Article 5 of the Honduran constitution. Article 5 governs plebiscites and referenda and sets the rules for holding them.

Under the current rules, it takes the action of 10 Congress people plus the President and a resolution from the Secretary of State's council, or 6% of the electorate to bring the question of holding a plebiscite or referendum to the attention of Congress, which must then get a 2/3 vote of support to hold it.

The Resistance passed this threshold in their call for a constitutional convention, obtaining the signatures and fingerprints of 1.3 million registered voters, or about 25% of the registered voters, but Congress ignored them.

But back to re-election. Remember the infamous Article 239 of the Honduran constitution? The one that the backers of the coup and the de facto regime claimed automagically removed Manuel Zelaya Rosales from office for talking about re-election? Miguel Estrada claimed it. Octavio Sanchez made the same claim. Michelttirepeated it incessantly.

The claim ignored the due process requirements of the Honduran Constitution and was nonsense.

Today no one is saying Lobo Sosa removed himself from office by talking about re-election.

Tuesday, January 11, 2011

The Unión Cívica Democrática, represented by Jimmy Dacaret and others, is in Washington, D.C. today to lobby Congress. Dacaret said they had meetings planned with Congressman Connie Mac (R., FL) , David Rivera (R., FL), and Lamar Smith (R., TX). They had also planned to meet with Ileana Ros-Lehtinen(R., FL) but she was traveling with Secretary of State Hillary Clinton in Haiti.

So why have these intrepid golpistas come to the US Congress? Dacaret told El Heraldo

"In the first place what we are looking for is cooperation; second that they help us with strengthening the UCD, also we will lobby for the cooperation with Honduras."

Interesting priorities. They are lobbying first for cooperation between the US Congress and the UCD, then strengthening of the UCD by Congress, and only then for cooperation between the US and Honduras. I suspect they're seeking more financial aid through the International Republican Institute (IRI), which initially funded them into existence in Honduras.

The UCD also intends to propose the implementation of Social Auditing of the aid programs to somehow guarantee the aid is getting to the poor in Honduras. I guess they think they're the government and can implement new rules around international aid.

The good news came through late yesterday: Juan Chinchilla, kidnapped leader of the peasant movement under attack in the Bajo Aguan, was free.

Now the details are coming out, and it is critical that they not be passed over lightly.

The article in today's Tiempo is headlined Director of MUCA escapes from his captors.

"Escapes" is the key word here. Despite massive mobilization intended to apply pressure on the Lobo Sosa government to seek his release, there is no reason to give credit to them, as Adrienne Pine suggests is happening in email communications.

Chinchilla was kidnapped on Saturday. His motorbike was found, riddled with bullet holes, near Tocoa.

According to Tiempo, he was found after his escape on the highway near Trujillo, the major city on the north coast of Honduras nearest to the Bajo Aguan settlements. Tiempo says Chinchilla has declined to talk to the police and has yet to take part in a press conference.

So for more detailed coverage, readers need to turn to the website of the Frente Nacional de Resistencia Popular, of which Chinchilla is also a leader.

There, Wilfredo Paz, another leader of the FNRP, is quoted as saying Chinchilla

"is in good condition, although very worn for the beating and torture they applied.”

Paz is quoted as saying Chinchilla is being kept safe in an undisclosed location. He went on to explain that Chinchilla untied himself while his guards were asleep.

Perhaps most troubling is that Paz reported that Chinchilla's guards were not all Honduran:

"Some spoke English, while others spoke a language he could not understand."

I originally wrote the following paragraph as the conclusion for this piece:

Watch for the Honduran police to dismiss this crime as unrelated to the political circumstances in the Aguan; to blame Chinchilla and to try to imply that he was engaged in drug trafficking; or to blame it on a generalized climate of violence. And don't be fooled.

Then, before posting, I checked for more Honduran news stories. Turns out I could not even imagine how bad the spin would be. This is from El Heraldo's story:

In relation to this act of delinquency, the legal advisor of the Instituto Nacional Agrario (INA), Marco Ramiro Lobo, asserted that what those who grabbed Chinchilla were attempting was to 'boycott' the negotiations [with Miguel Facussé, in which he was a participant].

“We are concerned that this act will provoke distortion in the negotiations", said Lobo.

Confused about who these people were, who might have been motivated to promote a breakdown in the negotiations? Read on:

Ramiro Lobo did not directly accuse the businessman Miguel Facussé for the disappearance of the campesino leader, although he stated that “the primary suspects probably come from this sector”.

Maybe there is another way to read this, but I doubt it: the INA representative is subtly implying that this was an inside job-- by MUCA. Think I am reading too much into the way Heraldo presented the story? read the first (and at the moment, only) comment on the story:

I don't know why this sounds like a sham to me, an invented kidnapping that didn't yield the outcomes that they wanted...

Well, I know why it sounded like a sham to you. Because that's how Heraldo wants you to react, and they carefully chose their words to give the impression that it wasn't really a kidnapping.

Sunday, January 9, 2011

The judge Claudio Aguilar of the Unified Criminal Court of Francisco Morazan has recused himself and his court from the case brought by the Public Prosecutor against Manuel Zelaya Rosales. The judge ruled that because Zelaya was representative to Parlacen, he was a high government official and that his court did not have jurisdiction as these cases under Honduran law must be tried by the Supreme Court.

This reading of Honduran law agrees with our analysis, that of the UCD, and others who were surprised the case was continuing to be heard in a lower level criminal court.

This effectively discards the motions for nullification placed by the public defenders he appointed for Zelaya.

A spokesperson for the court said that by the middle of next week the Supreme Court would appoint a judge to hear the case.

Thursday, January 6, 2011

So just what is this indicator called "control of corruption" for which the Lobo Sosa government would like to allocate blame to Manuel Zelaya Rosales?

The Millennium Challenge Corporation scorecards are built from data assembled by a variety of third parties. This particular indicator is one of six assembled by the World Bank ('voice and accountability', 'political stability and absence of violence', 'government effectiveness', 'regulatory quality', 'rule of law', and 'control of corruption').

captures perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as "capture" of the state by elites and private interests.

Note that last part, about capture of the state by elites and private interests. That's a big part of the problem in Honduras. Not to say that there isn't corruption by government officials for private gain because there certainly is, though no one has quantified it. However, the capture of the state by elites is a significant factor in this indicator, and the coup d'etat exposed just how tightly the Honduran state has been captured by "elites and private interests".

As our previous post shows, the MCC scorecards don't support the claim that this measure was the key to Honduras not being selected for a new Compact. Here's a chart of the World Bank data on this measure from 1996 to 2009:

What the chart shows is that 71%-80% of the world's countries rate better than Honduras on this measure, and that the results haven't changed that much, regardless of which party is in power, since 1998.

Our previous post also noted that Honduras had some problems during the MCC Compact in the 'rule of law' measure. According to the World Bank, 'rule of law'

captures perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of the contract enforcement, property right, the police, and the courts, as well as the likelihood of crime and violence.

The World Bank supplies data from 1996 through 2009 for this measure. Here's the chart:

As you can see, here the chart again shows Honduras with a low score, with 70% to 82% of the countries rated scoring better. It shows a pattern of year to year gains, then a steep crash under the Maduro administration, and then slight gains again under Zelaya.

Politicians, of course, are not required to pay any attention to actual data. In the Honduran context, it is probably great politics for the Lobo Sosa administration to blame this decision on Zelaya. But failing to come to grips with the actual history of performance is unlikely to help the country make a case to the MCC for a future Compact.

It isn't hard to find the data; what may be lacking is the will to face the facts.

The Washington Post today published an English-language version of press reporting from Honduras following the decision by the Millennium Challenge Corporation to postpone a decision on whether or not to include Honduras in the next phase of the program.

The story, by AP reporter Freddy Cuevas in Tegucigalpa, repeats claims made by the Lobo Sosa government attributing the MCC's decision to corruption that took place under the Zelaya administration:

"We lament this decision because it was based on an evaluation of the perception of corruption levels in the country. And it affects the people the most," said Maria Guillen, Lobo's chief Cabinet minister.

Guillen told reporters that the decision was "due to corruption detected in 2007, 2008 and 2009," though she did not elaborate.

Foreign Minister Mario Canahuati blamed "the previous government" and said "now Lobo has to taken on this burden (even though) he acted transparently."

Except that this storyline, so pleasing to the Honduran right wing, is not supported by anything said by the US Embassy or the Millennium Challenge Corporation. In fact, the MCC press release said that

“MCC recognizes the positive steps taken by the Government of Honduras, as well as its strong commitment to reform and reconciliation. We look forward to continued engagement with the Government of Honduras and future consideration of the country for a second compact.”

So what actually made Honduras unattractive to the MCC right now-- as opposed to in some mythical future when reconciliation (that word, again) is complete and reform (what reform?) has taken place?

Participating countries are evaluated every year by the MCC, which issues "scorecards" showing how they performed. The scorecards are issued for each fiscal year-- so a scorecard for FY (Fiscal Year) 2011 summarizes a year that began in calendar year 2010.

As we previously discussed, "control of corruption" was one of the few indicators where Honduras failed to meet the standard required in the "scorecard" released by the MCC in October of 2009 (covering 2008-2009), scoring in the 44th percentile among its peer group of countries. (A reorganization of the MCC website broke the original links to this document; all the cumulative scorecards can be found here.) But even so, Honduras actually met its goals in this category in 2009. That's why "control of corruption" was green on the lovely color graphic MCC uses to summarize performance.

(In contrast, the two areas where Honduras failed to meet the criteria in FY 2009 stood out on the scorecard in bright and alarming red: "rule of law" and "fiscal policy".)

In the absence of any clear statement from MCC about where Honduras might have gone wrong-- other than that little coup thing and continuing violations of human rights, of course-- it is useful to simply glance over the scorecards from FY 2005 to FY 2011, covering data from 2004 to now.

"Fiscal policy" was already a major problem in the scorecard for FY 2005, when Honduras scored in the 47th percentile. Fiscal policy remained a problem consistently over the entire history of Honduras' participation in the MCC Compact from 2005 to now. Honduras score dropped to the 30th percentile for FY 2007, rose to the 37th percentile in FY 2008, to the 43rd percentile in FY 2009, and to the 44th percentile in FY 2010. The most recent scorecard (for FY 2011) shows a major erosion, back to the 40th percentile.

Fiscal policy is the only category in which Honduras consistently missed the MCC's targets. It seems much likelier that the decision of the MCC was based on this consistent inability to meet the expectations of the Corporation. But two other indicators shifted back and forth between acceptable and unacceptable: "rule of law" and "control of corruption".

"Rule of law" was marginal-- in the red in FY 2005, back into the green in 2006 where it stayed until FY 2008 (2007-2008, the year that political conflict that ultimately led to the coup began to be really visible). In the 2010 scorecard covering 2009-2010, 'rule of law' was again scored as a failure, which makes sense considering this covered the period of the coup d'etat and de facto regime.

"Control of corruption", the measure that the Lobo Sosa government wants to blame for the failure of MCC to renew Honduras, was an issue in FY 2008, improved in FY 2009 sufficiently to be scored in the green, and then in FY 2010 and FY 2011 reached its lowest point, well within the red (falling to the 44th and 45th percentile). But these results cover the period from 2009-2011: that is, a period when the Lobo Sosa government and its predecessor, the de facto regime of Roberto Micheletti, were in control for the majority of the time.

It is not surprising that the Honduran government would like to blame a scapegoat for this decision. It is unfortunate for them that the data available don't support their claim, and suggest a far simpler explanation: Honduras just didn't meet the economic expectations of what is, after all, a neoliberal economic institution.

But it would be great if the Washington Post could manage to pretend to do some actual reporting rather than simply giving print space to unexamined claims like those made by the Honduran cabinet ministers quoted in the article they chose to print.

The French paper Le Mondereports today on two US State Department cables from Hugo Llorens, US Ambassador to Honduras, to the State Department, one dated 18 June, 2009, and a follow-up dated 19 June 2009. (These cables are not yet up on any of the Wikileaks mirror sites, or Le Monde's cable browser.) For our non-French-speaking audience, here are highlights:

On June 18, 2009, just ten days before the coup, Hugo Llorens wrote that he did not believe in the rumors of a coup then circulating in Honduras (rumors we personally heard as well, from trusted colleagues):

"At present we do not believe that the military leaders have any intention of attacking the legitimate government"

Llorens concluded.

Llorens reported having breakfast with General Romeo Vasquez Velasquez and General Miguel Garcia Padgett and receiving their assurance that the military would not move against the government of Manuel Zelaya. They told Llorens they had spoken in private to politicians to put pressure on them.

Vasquez Velasquez told Llorens that the military was in an intolerable situation because they had been ordered to carry out a poll which was considered illegal by the Honduran judiciary and the election tribunal. He told Llorens that the military "will not do anything without the support of the American administration."

On June 19, Le Monde reported, the tone of Lloren's cables changed:

"Honduras rushes perhaps to a major political confrontation."

Llorens reported his aim to reason with Zelaya and bring him to a face-saving solution to the confrontation. He reported that the Embassy had

"no information suggesting that Zelaya or a member of his government intend to trample democracy and suspend constitutional guarantees. "

Llorens continued to

"believe that Honduran democratic institutions are strong enough to survive, even under stress. "

As Le Monde notes, nine days after the June 19 cable, the military, Congress, and Supreme Court staged the coup.

The jury is still out on whether there are democratic institutions in Honduras strong enough to survive the coup and its aftermath.

This airport was first proposed in 2003 during the Maduro administration. At that time the Instituto Hondureño de Antropología e Historia opposed locating the airport in the Rio Amarillo valley.

The World Heritage committee of UNESCO studied the issue in 2003, and again in 2005. Its study, and decision, are both available at the UNESCO website here. They reference the Institute's report opposing the Rio Amarillo site, dated to 2004.

In 2003, ICOMOS, the International Council on Monuments and Sites, recommended closing the airstrip that up until then was located at La Estanzuela, less than 2 km from Copan ruins. Nonetheless, the government continued to allow it to function, with 187 flights recorded in 2004.

At the time, ICOMOS noted that Honduras should develop the ruins of Rio Amarillo for tourism, as it is the second-largest Classic Maya city in Honduras.

Finally, ICOMOS noted that the government maintained a helicopter landing strip within the Copan archaeological park, where 23 helicopters landed in 2004, something that raised their concern.

So in 2003, ICOMOS recommended that Honduras

1. establish a no fly zone over the core area of the Copan Ruins.

2. close the airstrip at La Estanzuela

3. reconsider the location for a replacement airstrip.

They were clear about their concerns and what was at risk:

ICOMOS adds to this that the properties of Piedras Negras, Rio Blanco and Rio Amarillo must be protected due to their important scientific value for the overall understanding of the the cultural system of Copan and its potential role as a state.

In 2005, the committee again

1. reiterated its call for establishing a no fly zone over the core part of Copan Ruins.

2. encouraged the government to reconsider its decision to locate an airport at Rio Amarillo

3. requested, should the government decide to ignore the relocation request, that it conduct an environmental assessment and develop a comprehensive Public Use Plan for the world heritage site of Copan and submit that plan to the committee for consultation.

4. requested the government update the committee with a progress report by 1 February, 2006.

The Río Amarillo airport plan was subsequently approved by the Maduro administration. SICA reported on July 11, 2005 that the BID approved financing for the airport at Rio Amarillo. Press reports linked the dismisal of archaeologist Carmen Julia Fajardo from her position as Head of Investigations of the Institute of Anthropology and History to her opposition to this plan.

In the election of 2005, of course, Manuel Zelaya Rosales was elected president, turning out the Partido Nacional and replacing it with a Liberal party administration when he assumed office in 2006.

Under Zelaya, the new government decided the airport should be built at La Concepcion, Copan, instead of the previously favored Rio Amarillo site. The advantage of the La Concepcion location is that it can both serve business development around Santa Rosa de Copan, while also providing access for international tourists to Copan Ruins.

In 2007, Zelaya promised an 18 month time frame for the construction of the airport. To make the Concepcion location work, Honduras would have to pave 8.75 km of road from Santa Rosa de Copan to the airport, and a further 29.5 km of road from the airport to Copan Ruins.

The airport itself was to be financed by the government of Taiwan, with funding contingent on Honduras building and paving the roadways. The Zelaya administration began the grading of the road from Santa Rosa to Concepcion, and then everything stopped. Nothing more happened.

Saturday, January 1, 2011

The Interior Minister, Áfrico Madrid, has closed down the facilities of Creciendo en Gracia in Tegucigalpa. Creciendo en Gracia is a cult, headquartered in Miami, Florida. The founder, José Luis De Jesús Miranda, believes he is "the man Jesus Christ" and urges his supporters to tattoo "666" on their bodies.

On December 29 this year Creciendo en Gracia in Tegucigalpa held a public tatooing event, in which members got 666 tattooed on their arms, necks, foreheads, etc. On December 31, Áfrico Madrid and the National Police locked up the cult's facilities in Tegucigalpa.

Madrid alleges that the cult is operating under the wrong kind of paperwork, eg, they filed as a mercantile association, a business. That's not surprising since that's how they are organized in the US as well. They don't seek a tax exempt status and are happy to pay taxes. Its worth noting the cult has been operating in Honduras since 1994 and has centers in Tegucigalpa, Comayagua, San Pedro Sula, La Ceiba, and Santa Barbara.

Madrid says they need to file different paperwork to operate as a church. However, Madrid also said they were closed down by order of the Fiscal de Menores (Children's Prosecutor) who was concerned because they had tattooed children in their public event on the 29th, not withstanding the declarations of the cult leader in Honduras, Hector Fonseca, who said that the children were tattooed only with the permission of their parents.

Áfrico Madrid, the Interior Minister who previously banned Halloween celebrations, may need to read his constitution again. Article 77 of the Honduran constitution guarantees free exercise of any religion or belief as long as it does not contravene the public order or laws of Honduras.

Madrid failed to identify any law that had been broken by the cult that would justify shutting them down, and since they've been operating under the existing paperwork since 1994, it would appear that Madrid is once again carrying out his own religious agenda, in violation of the Honduran constitution.